Energy Dilemma: Russia’s Naval Build-Up and Putin’s Great Game

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After the disintegration of the Soviet Union, Russia’s military and economic capabilities were substantially diminished. The navy suffered especially significant decreases in its size and global reach as the new Russian state had few resources for a globe-spanning fleet to compete with a rival superpower. However, the development of an economy based primarily on energy exports has caused Russia to re-emerge as a major regional economic power.

This economic resurgence corresponded with Russia’s increased political power and leverage over European countries. The most notable example of Russia’s increased economic leverage is in Germany, which imports 40% of its total gas consumption from Russia, a total of 35 billion cubic metres in 2011, or 2.8 million barrels/day. Although European states have attempted diversification, the situation in Poland is similar and in 2009, Poland imported 94% of its crude oil from Russia. Central Europe’s dependence on Russian energy is just one example that highlights Russia’s increased economic leverage. Energy exports are the basis of Russia’s current economic and political resurgence; rents from oil and gas production constitute roughly 50% of the Russian government’s budget. Thus, emerging areas of new energy production, such as the Arctic’s Northwest Passage and the Eastern Mediterranean, will become a threat to Russian economic interests without a substantial increase in Russia’s naval presence in the region (Why?).

Explorers historically attempted to discover the Northwest Passage through the Arctic, as this passage would have revolutionized shipping and trade. The United States Geological Survey estimates that the Arctic Circle holds 13% of the planet’s undiscovered oil reserves, the deepest being found at 500 metres of water, and 30% of the world’s reserves of natural gas, with substantial resources of shale gas. It is in this context that Russia, a country with one of the world’s longest Arctic coastline will seek to dominate the region in order to safeguard its economic interests; if Russia can claim control over the Arctic waters containing these oil reserves, their position as a vital player in global energy will be secured. Russia has been actively involved in the contested Arctic region, resolving a long-running dispute with Norway in 2010 over contested territory. The most significant form of Russian involvement has been the expansion of Russia’s naval capabilities and presence in the Arctic. This is clearly demonstrated by their policies. In 2009, Russia announced its investment of one billion dollars in the Arctic port and naval base at Murmansk, with the intention to to double its shipping capacity by 2015. As well, the growing production of new warships in the Northern Fleet exemplifies the trend towards an increased Russian naval presence in the Arctic.

More recently, Commander-in-Chief of the Russian navy, Admiral Viktor Chirkov, announced Russia’s intention to increase the presence of its navy in the Eastern Mediterranean. This presence would reach as many as ten warships, the largest presence since the collapse of the Soviet Union. While Russia’s naval base in Syria is not perceived to provide significant economic benefits, the facility in Tartus has gained new relevance with the discovery of major shale gas deposits in the Eastern Mediterranean off the coast of Cyprus, Israel and Syria this year. The extent to which Russia benefits from these shale gas deposits largely depends on the outcome of the Syrian Civil War. If Bashar al-Assad’s regime, aligned with Russia, is toppled, Russia will most likely evacuate its bases in Syria. Then, its ability to project power in the Eastern Mediterranean, and thus secure influence over the inevitable exploitation of these energy reserves will be greatly diminished. Consequently, President Vladimir Putin’s New York Times op-ed, and more broadly Russian support for a negotiated solution that maintains their influence in the region, can be viewed from the perspective that Russia’s energy interests closely correspond with the outcome of the Syrian conflict.

If Russia loses the revenues it derives from its key position in international energy markets, its economic growth will decline precipitously, thus undermining the basis for Putin’s stranglehold on power. Therefore, Russia is willing to escalate its naval build-up, act aggressively in claiming and exploiting territory in the Arctic, and defend a brutal allied regime in Syria in order to assert its energy interests. As its economic prosperity is predicated upon its ability to continue exporting to energy-dependent states, Russia will do whatever it can to maintain this power. Ultimately, Putin’s continuation of the naval expansion program in the Arctic and in the Eastern Mediterranean will be a crucial determinant of Russia’s ability to maintain and continue expanding its leverage over the international trade of energy resources.